Prior reports indicated that Rapidus is on track to secure orders from Broadcom, with plans to deliver 2nm chip prototypes by June 2025.This positions Rapidus to successfully mass-produce chips leveraging cutting-edge fabrication technologies, while simultaneously establishing a robust customer base. The company is steadily resolving the three key hurdles it faces.
To achieve its goal of initiating mass production of 2nm logic ICs by 2027, Rapidus must overcome three significant challenges: securing customers, raising approximately JPY4 trillion (approx. US$25.3 billion) in capital, and developing the essential mass production technologies, Nikkei reported on January 8.
Customer acquisition challenges
The challenge of acquiring customers is intricately tied to the other two issues. In practice, the ability to secure sufficient funding for 2nm chip production, coupled with the concern of whether the produced chips will meet customers' exact requirements, represents a significant risk for potential clients.
Rapidus' current investors, including Toyota, Sony, Kioxia, SoftBank, NTT, Denso, and NEC, are also potential customers. However, their investments, each limited to JPY 1 billion, reflect a cautious stance as they meticulously assess the viability of Rapidus' success.
After validating the performance of Rapidus's 2nm chips, Broadcom may entrust Rapidus with the production of semiconductors for data centers. This opens the door for Rapidus to take on chip manufacturing for Broadcom's high-profile clients, including major industry giants like Google and Meta.
Unlike TSMC, which focuses on high-volume production, Rapidus is dedicated to producing customized, small-batch, and diversified products tailored to the needs of emerging companies. At present, its early-stage partners seem to be AI chip startups like Tenstorrent, rather than large IT giants, meaning its shipment volumes are likely to remain modest for the time being.
Given that small-batch, diversified production may not generate sustained profitability, forging partnerships with industry giants like Broadcom will be crucial for achieving meaningful breakthroughs. However, even if Rapidus successfully secures customers, the true test lies in its ability to reliably manufacture the chips, which remains the cornerstone of its long-term success.
Tight timeline for trial production, but progress exceeds expectations
Insiders at Rapidus have disclosed that the plan to introduce EUV lithography machines in December 2024 and begin trial production by April 2025 presents a challenging timeline. However, Rapidus president Atsuyoshi Koike emphasized that the trial production progress is advancing more smoothly than expected. The initial yield target for the April trial is set at 50%, with the ultimate goal of achieving a yield of 80-90%.
Japanese government steps in to support Rapidus's ambition
On the funding front, the Japanese government has already committed as much as JPY920 billion in subsidies to Rapidus and has stated its intention to provide further support in the future.
The Ministry of International Trade and Industry (MITI), now the Ministry of Economy, Trade and Industry (METI), played a key role in driving the prosperity of Japan's semiconductor industry during the 1980s and 1990s. However, in the 2000s, its attempts to revitalize the sector ultimately proved unsuccessful. In the aftermath of the 2008 financial crisis, Japan's semiconductor and electronics companies sharply curtailed investments in wafer manufacturing, with many transitioning towards IC design or adopting asset-light business models.
Japan's leading logic IC manufacturer, Renesas, has remained at the 40nm technology node, despite having developed 28nm mass production capabilities that were ultimately never commercialized. As a result, Japan's semiconductor manufacturing technology has stagnated for nearly two decades. Now, backed by historic long-term investments, the Japanese government is supporting Rapidus in its efforts to revive and propel the nation's semiconductor industry forward.
The Japanese government plans to become a shareholder in Rapidus after its investment, but Koike emphasized the need to keep government involvement limited, with the private sector remaining at the helm. Consequently, the scale of future investments from private companies will be crucial in shaping how Rapidus addresses its funding challenges.